IO - Earnings call transcript Q4 2019

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Operator

Greetings, and welcome to the ION Geophysical Fourth Quarter Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Rachel White, VP of Corporate Communications. Thank you, Rachel.

begin. may You

Rachel White

Good XXXX Operator. us welcome Ion's to Thank Conference morning, Call. Quarter Earnings joining We Fourth you, and appreciate today. your

Chris Executive on hosts Chief Executive Financial indicated X, Usher, and are President As Vice President and and Officer; Slide Chief Officer. Mike Morrison, today our

you have website, accessible using also I accompany slides will Before I today's the iongeo.com. via to of items call, over call few turn are link to our on cover. There them, which replay call. a to a We'll find be today's

SEC statements in we during statements. results our me Before these to including XX-K projected let remind to filings, begin, performance are or other in statements call you various materially statements. forward-looking which that constitute may detailed from certain and those uncertainties, latest those made cause may risks differ subject this our These and

Our remarks non-GAAP measures. today also may financial include

including be non-GAAP details our most can measures, yesterday. measures, regarding directly these financial reconciliations Additional found release to issued GAAP the financial earnings in comparable

call turn begin will Slide on now Chris, who over I'll X. to the

Christopher Usher

everyone, Good joining Thank us and morning, thanks again you, today. Rachel. for

close multiple Our acquisition, we were launch primarily fourth multiclient were because pipeline. financial able deals to programs quarter disappointing, not in library results quite several and our data new

As our in upward on a fourth improvements multiclient slightly trajectory result, quarter towards annual down our XXXX, businesses. the full all timing with year countering we than building rather results were for have been other deals the

not rights government to the due in geographies, programs host secured new but not We acquire get - did new to programs multi-client delays. launched

earnings the quarter peer due impacting reported the material data and close longer did recent phenomenon data controls discretionary observed quarter their several to exploration on to Several processes focus volume pushed given generation, data deals large oil quarter, data price. years, different purchases group the of have of E&P Despite customers now ultimately have tens appears been dollars the in our tighter lower of deteriorated drivers. significant were by during And library have addition, budgetary order not year-end. library strong millions value In fourth our of on across library business the fourth deal out. but procurement

a Just of in XX a sense threefold disruption the prior multi-client, had you in spend average the X more give customers our versus of of sales change top XXXX years. ION X to an than

activity And mentioned, recognize as business always we in been are we the all While just data market are extreme the lumpy, as other library to I temporary business year-on-year. our targeting. are expect we this has improving lines indicators be more sectors up

fundamentals a we we As directly areas on control. result, are working focused and

Services investments. improve investment XD to costs structure Our for tends XXXX. implemented top multiclient to market, have & shift venture expenses. and strategy, restructured our program scale sales projects our operational closer capital in in We our structure, segment We E&P organizational X our a Technology execution new our significant and reflect our organizational operating to strategy key and include accountability. acquisition to and lower revamped ways XD more bringing programs reservoir the new and potential. to our to our our multiclient This is larger to the new entry into We objective reorganized acquisition where earnings accelerate be consistent organization revenue cost-reduction

focus for some for have in We more shift the been groundwork laying meaningful time. a

success frequency technologies source in likelihood of and increase completed over to to XD library programs our programs. given the data like experience development us space beautifully of data almost further enhanced from seamlessly square for reimage of the the opportunities new to which not We XD the rapidly have grown seen kilometers seabed credibility in our system last multiclient led has ocean We towed few streamer have force years, participation we integrated, pipeline and nothing enabling of bottom a new and XXX,XXX and/or XD before. our XD

Marlin core successfully to released the We we also in software second operational the adoption successfully accelerate development significantly is Therefore, by our our we and resources increase market business side and in - company's to Marlin redistributed outreach also ports Harbors, objective. on increased adoption new gained markets. major which traction

the the year On structure. takes the first time reduce need equation, we adjust as strategy, I to the into side restructuring corporate felt cost CEO my were the and due of we and cost for actions. undertake half our business monitoring to market taking recognize After account to these it

but been was slower address needed quarter recovery that more and the fourth certainly cemented it Our to subdued market something in we performance than cycles. decision, has disappointing that past

active executed on impact this we program will limit execution detail will savings while January, of improve $XX more strategic priorities million. savings delivering on a program achieve annualized Mike focused that over to the provide cost shortly. initiatives In will

the about took With when behind still I I'm I say role. CEO business that work us, the as as excited can

are gaps. can should selective around sales We rebalance position results. which that see is and maximize related portfolios up, customer to financial new picking which landscape, we and activity the opportunities to base aligned drives material industry value, that ION fill customer our Offshore uniquely data in better initiatives knowledge lead among

as momentum our the notable that optimization growing which could around business, XXXX positive in We one reshaped new multiclient deals several of and to as large opportunities a quarter. that have around reengaged our would quarter, next. have XD and slipped out operations speak fourth There acquisition, lot early I'll is close results this a data including library

compared decrease decreased our In XX% revenues. quarter quarter our multiclient in the due XXXX to fourth a to E&P Services Technology & revenues segment, this

program, to to note in per more library phase year sales, the on activity, attributes shift finish is pronounced of quarter. Offshore the that data with new XD important which library quarterly decline we strong is earlier It the had fourth venture commentary. While my planned a to significant our in the recently Picanha, to Brazil, of multiclient shelf, largest some went data the

multi-client About X/X XX%. offshore down For the full revenues of X% year, year were program were our growing our from revenues E&P were down Technology Services multiclient Brazil. while revenues Picanha

XD significantly XD We expanded XX%, to XXXX. our more by programs data new of all by and increasing XX XX%. our ahead X compared and library importantly, for sanctioned XXXX, X multiclient We of during of goal portfolio

have timing governmental we new higher-dollar an XX summer. one, gaining scale quantity While in didn't Also, successful envisioned, that December. X second multiclient the in the delayed in the were since not started. were has the permitting were X we Of of And materialize sanctioned one, on anticipated programs but it programs the and yet award tendering and the to been investment the improved, the large process as the programs X delayed of we due the especially launching second half, programs access.

flowing in most the for programs will those So revenue XXXX. start of

we programs there. X have quarter, call totaling multiclient square new X the reimaging reimaging since programs. During XX,XXX spoke unconventional the We XD building XD and about program in substantial sanctioned sanctioned offshore new Basin last Neuquén kilometers, Argentina's Brazil offering our on

XD sanctioned offshore also a We program Colombia. XX,XXX-kilometer reimaging

to data knowledge, in continental sanctioned margin. Colombia's also to Leveraging our acquire of existing blocks National data create reprocessing deepwater the recently holistic we Uruguay. over to a of Early regional offshore the square ANH, XD quarter, subsurface data, a XD kilometers programs first the program are existing In Hydrocarbon and country's SPAN exploration reimaging a offshore. XX,XXX reimaging Uruguay perspective new we granted multiclient and the XD Agency, addition new us rights

exploration as near existing production, portfolios, opportunities around emerging breakeven back we gaps and decision-making whether forward our seek offshore customers support E&P to to of now rebalance Looking to opportunities. filling basins, knowledge basins. spending, out was that's to diversify shale infrastructure-led frontier diversifying can XXXX, targeted to all a acreage target We shifting part worked strategic moving attractive client lower aspects of mix hard is reservoir. closer portfolio large and Spending or of which the

new basin as We XD strategically to library our leveraging through reimaging expand multiclient to are the dictate. to our either or global identify opportunities opportunities SPAN acquisition offerings

Last quarter, our bottom with enhanced we frequency in rapidly ability spoke source. ocean our to ecosystem evolving the differentiate about

frequencies reminder, friendly source this to extends model a significantly in estimation data acquired environmentally higher more a for energy improved range. low novel while velocity frequencies As limiting the

in E&P increasing of to be seabed final significant the ingredient, as and for the streamer months, this support have well multiple collaboration the industry last validated trials XX quality operator as Developed a data sets. key during towed solution over with image an we field established

commercialization We are our map. actively XXXX engaged road around with customers launch and partners

second be are program around maturing permits library announce of XD have acquisition pipeline addition and our world. the ingredient technology the new will significant to key successfully multiclient multiclient portfolio, new data in We our are a in secured a XD enhanced to the hoping opportunities acquisition and source, ION's portfolio of XD frequency quarter. believe a including our executing We number

year. full revenues were XX% up imaging and services quarter this the for Our

the distinguish remaining to X proprietary multiclient forefront and important customers' at the customers continue minds. on imaging resources imaging of Tier our the We offerings on capacity our new multiclient strategically of is underwriters to programs. those become potential our projects reserve to brand challenging for deploy when This keep eye majority

on focuses our XX% technology that key to clients and suite, our basins team proprietary this services us imaging met XXXX criteria. advance of Our enable and continually business

have strategy benefited this backlog clients problem remains Imaging new We approach service. solving business who and healthy. customer repeat had strong from attracted and our have under services to

equipment revenues year, to increased new repairs. technology Our largely replacement sales this due up marine Operations Optimization XX% and were and

due seabed. the lease X to Optimization and XX% backlog quarter, annually, level and business, for se provides in revenue contracts long-term continued highest control We during performance command of reaching X group's this renewed downturn, software X and software and Our for deployments. up strong side streamer robust as don't control these was towed contracts business. but for combined great stability the the our solutions, consider since our of revenue We Marlin-related revenues recurring with our the per model long-term Operations command

about that and software from our investments XX% commercialization. technology this were pleased very recent I'm year revenues of

market a operational from continues X efficiency offshore transformation to has our segment. recognized digital X of companies for to Our to moving use long-term software enabler number Marlin maritime and doubled of in drive committed Marlin, become performance the improved the We contracts. and

nicely. our in Moving is to adjacent pilot U.K. progressing Marlin markets, SmartPort the

customer Our latest with this anchor surpassing port workflows. deployed is expectations and already digitalization release the of successfully around is

of sales address we progress, customer. ferry ramped cured of our U.K. cuts add business made geographies parts resources the given business, Given and SmartPort other other in we the quarter just Marlin will and quarter ports development appeal another solution. port capacity the to Despite this and up we ION's our during

refine closely efficient experts We engage a are working service and our the software with map as solution and develop continue road assure Marlin to to with to of AWS SmartPort industry that ports core both in harbor and and initiatives software made the progress key business we've markets. position future the adjacent our in other success for with I'm executing offerings. provision pleased company

an by equipment driven our In the of revenues repairs. were Operations and up year-on-year, in group towed segment, increase streamer Devices Optimization XX% replacement

towed the downturn. business proprietary streamer in crew solution well, are and we our clients higher pricing utilization since have the improved highest seabed accuracy Still of the clients' deployments seeing to in both the Our positioning for correspondingly, and surveys, and continued and segment provides efficiency to go clearly projects. contracted level

fourth activities future exhibiting our broader the shelved fewer initiatives During materiality do business market with some intent reviewed perhaps To Devices versus we quarter, a things synergies the ION. with our that lack business in devices underway we better, successes software latter. across the technical adjacent and purposeful identified

synergies led invitation security Exercise, the for a our has and which of Naval ports demo broader Advanced Technology ANTX technology call, market event port U.S. generation Operations We drive is harbor at integration successful our as That harbors, recent our mentioned rapidly digital aligned the prior can Optimization Navy's believe to the our Navy the this XXXX segment. their center by across and diversification in Marlin in here success activities security back piece. featured transformation solution. our ANTX, next efforts We to more much to arena, the demo closely our

With taking turn walk Mike I'll to wrap the then over and up it through questions. I'll that, us to before financials,

Michael Morrison

finance the CFO, Thanks, results. over introduce last and my at our as of accounting to XX spent Chris. I've myself, take financial Good morning, everyone. ION. before like a have experience, first to reviewing call I moment I'd XX years

decade primarily focused my The of auditing. first career on accounting was and

The the on second controllership decade ION. at centered

I and company's During frame, integrate company, acquire of successful some this the pivoting ION solutions and time started strategically a to most acquisitions. helped

Bate's role capital operational served recent and Finance and on Most for leading focus Steve the my Treasurer, Steve right-hand the remain finance, finance, years. was X transactions of where most June transition. FP&A, will market my to of increasingly as facilitate to smooth man VP I with help until ION as a end recently, last

walk now financials. will I through introduction, that With the

X% compared quarter down revenues $XXX XXXX, decline Our revenues. were to the fourth the full in year million, result of multiclient

revenues, up multiclient Excluding businesses year-over-year. were other all

million compared year full adjusted million last year. $XX was to $XX EBITDA Our

$XX XX% fourth Optimization X%. XX% quarter & Operations down of Technology compared revenues revenues to to compared segment quarter driven in revenues Services of Technology in revenues, E&P E&P our were million, our were our multiclient and quarter, our The XXXX. & by down was fourth declined within XXXX. the fourth Moving XX% were by to the decrease the down Revenues Services which segment

this mentioned, venture new Chris year-end spending. largely and As was to our library related reduced data programs

A of increase this was $X group, in quarter. systems bright which spot revenues our imaging XX% million, a had

Our an In decline. our & revenues Operations of quarter as backlog with flows we to revenues healthy due $X of Imaging groups XXXX quarter remains the that segment, X business Software Both were normal Services more the million, year X% a Optimization ago. those during down XXXX, Services of double $X fourth from entered were ebbs X% decline than and businesses. million, our and the modestly were Devices Optimization

in quarter year, streamer fourth For deployments. repairs. $XX compared loss per we $XX of up revenues by XX%, of XXXX. a in And full Software Devices the or a increased for a increase a equipment loss driven share share towed of were & the net and $X.XX quarter of or per of Services replacement the loss Optimization reported loss million Marlin result of Overall, revenues XX%, net fourth the million $X.XX to were

adjusted million the per library. in to compared a impacting certain impairment million quarter of diluted was per of data with to special $XX item The adjusted $X associated primarily our of fourth million net items share a $X quarter or XXXX $X.XX an the of older our Excluding XXXX. our XD fourth share charge of vintages income special loss or $X.XX net related noncash in of both periods, loss

our reconciliation the detailed issued special press a find items of results our can release the You yesterday. of in in financial tables

reducing cost a in January. implemented program an eliminating will program This spending, contractors we mentioned, facilities on reducing over million of focused and by our our XX%. this annualized and Chris As reducing on savings save workforce around discretionary program $XX basis. use our Overall, certain

to effect start fourth immediately We year. reductions, benefit full in these savings will these from the the of of quarter this starting realizing

year revenues. greater a over $XX adjusted pro To savings, forma EBITDA help illustrate meaningful XXXX have the our impact basis, our cost full of would of these XX% been on or than XXXX million

balance was were cash there amounts $XX credit facility the million, of no outstanding year. Our our and under at the end

cash remains from XXXX. year. borrowing Our revenues, combination credit total liquidity ago Despite we our and our last in $X $XX the from under million liquidity, decline end defined was the million up $X quarter the available X capacity our head of and of million, quarter as healthy fourth revolving as into down the balance facility,

With that, I'll to turn Chris. it back

Christopher Usher

Mike. Thanks,

performance. quarter fourth adjusted and course for improved So stage and required the disappointing consistent made set more our to adjustments we have some

are investments play, up multiclient. budgets, year-on-year the expect XXXX be single finalize growth We digits double-digit flowing crystalizing still stronger While anticipate we with seismic such and spending in E&P clients more to outlooks areas key as we offshore. as our

data We purchases. also funds adjusting account our E&P an in our more the possibility. Part is base quarter trend aimed the believe discretionary there throughout disciplined and regular less client reorganization engagement processes planning perhaps to among fourth spending more that left year, is address our will for emerging with lead at budgeting this over to of customer for

to on E&P business. fully an still rely we developing, our that's recovery will market growth given improve So not

a and segments providers, competitive. asset-only on focused into believe market are and we we In largely we where that different. players bifurcated entering landscape seismic costs asset-light believe is we're controlling are We new

have Our in innovation. said above of punch weight our customers terms we

do XXXX, continue and a fewer In we to will culture things build around better, we will execution.

cost strategy, materially us We year first are reorganization of believe enable deliver multiclient recent reductions streamlined the entering reorganized building market our memory. on and profitability focused out Marlin acquisition business. the full XD the will the of in new and combination SmartPort and to We

it we'll for operator back to Q&A. that, With turn the

Operator

[Operator Instructions].

Oppenheimer & Colin first comes of Company. from The question Rusch

Joseph Beninati

on backlog give but your little has I on lines? seeing you are purchasing Can sales Colin. Joe see the Services Imaging business? for shorter the decisions make grown, This clients is update cycle the pace of on you for a time that

Christopher Usher

much morning. is thank Imaging this us seeing this yes, than Joe, Well, more Chris, you thing joining for seen. on tender the so we're activity certainly first Services, we've

up. it's So a kind picking gradually for bellwether things of

are the which proprietary awarded, have surveys to making also or large in for waiting be of you because can also decisions, that that terms delays put In people driver some timing. be the acquisition it out depends and market there very on you're

for the access stuff the reprocessing, that takes to a awards. see you clients tapes. The those have the that But - data get some those, to exists. of long So time already for

go So those quickly. tend pretty to

a deal a And thing. processing good seeing larger are have People obviously reprocessing or size, we surveys. larger and budget are - trend for appetite towards an a which is

I don't acquisition to variable there. whether So we're the - think in close trend where and pushing I the timing surveys a they're good reprocessing. depending is of or deals out. see the It's certainly size I But shape new on don't

Joseph Beninati

you then, in talking gears. all I Got much about the Kind that's customers how offering? of And guess, switching have currently many it. How Marlin the do testing last year. grown

Christopher Usher

Sure.

got you we've year-on-year. - our on made side, good progress, market core reflected I Marlin we've seismic the on So obviously, got which where

complicated have on a in often it basis. on people congested we useful very basis, clearly temporary operational areas, using project So It's a environment.

the for software, our trouble had there. to obviously, deploy people business. long-term and XX is long-term So basis. command And months, just been it successful control just And no project a our we've on subscribers core last getting over the getting we've objective like

they X, been that's installations They contracts. been it they've for multiyear and long-term - tagged contractor of the try leases. it. X up our also where and the just Marlin went But command of getting the base clearly we over got their resistant - line, has contractor As to and and I and lease to basically year our on with kind needed we've The with we from tagged to actually X successful we noted, out this oil software companies to contractor agreements, into base. long-term and been long-term signing customers on most control wanted

good. So that's been very

out that's long of it So there. to it's term. for a decide question It's just people adopt commercial completely to the getting

it's area with more people the in years. where adjacent not track the being is markets, over record with familiar tested had that business The where in couple have seismic of the last the been we've Marlin

and been focusing we're it's brand-new year customers starting on interesting interesting. markets, an XXXX, started satisfying we digital identified So in discussions that we entering ports was as where really take had with that's once well. hold only and ports very were We've harbors, initial transformation market very and some who to was and last

decision year, see like we'd connecting year testing of to cetera. feature. a after, kind this, back and saying, on based convert software it for very onboard et we'd next road able made we've to basis of and add for to to take Marlin the them with actually purchasing front systems, help map little like this and test put product in customizing very So those define existing the us invoicing the But been those the office quickly on then a just they've The guys installations.

two go two Marlin the answer with customers just question? port fourth had Does We quarter. live that in we've in space. of So had your those the

Joseph Beninati

Yes.

Operator

closing Mr. Usher, for comments. are floor at [Operator no this The is yours time. any Instructions]. questions further there

Christopher Usher

well we to for to and time forward first XXXX. you and hopefully, call much. very to year XXXX the you taking you speaking on as the at you that Well, outlook quarter fourth attend interesting Thank our and for we to call, appreciate in results on have updates coming everyone the the full some for quarter, time. and the Thank as I today listening look have

Operator

participation. today's conclude gentlemen, does thank for you your This and teleconference. Ladies

You may wonderful day. and have disconnect your a lines,

Ion Geophysical (IOGPQ) 6 Feb 202019 Q4 Earnings call transcript